Clicker questions April 5 _ 7 with illustrations

Clicker questions April 5 _ 7 with illustrations - quantity...

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PS 5 Due Thursday, 8:10 am
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Monopoly April 5 Econ 100A Prof. Reynolds
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x p If we are in the inelastic portion of the demand curve, revenue increases when a. Quantity decreases c. consumers’ income falls b. Quantity increasesd. the price of a substitute falls e. I can’t believe we have to remember this stuff! D MR
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x p A monopolist facing this kinked demand curve would produce D MR MC A B C D
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x p A first degree price discriminating monopolist will have surplus equal to a. 6+7+8+9 c. 3+4+6+7+9 b. 6+7+8 d. 1+2+3+4+5+6+7+8+9 e. 10+11+12 D MR MC 1 2 3 4 5 6 7 8 9 10 12 11
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x p D 1 MR 1 x p D 2 MR 2 MC First degree price Discrimination
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x p D 1 = MR 1 x p MC First degree price Discrimination x 1 x 2 D 2 = MR 2
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x p D 1 x p D 2 MC If we could not differentiate, Type 1 would purchase the package offered to Type 2 if we kept the same pricing scheme as under 1 st degree price discrimination x 1 x 2 x 2
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x p D 1 x p D 2 MC What price would we charge for x 1 to keep Type 1 indifferent between the two options? Is the monopolist making more profit? x 1 x 2 x 2
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x p D 1 x p D 2 MC The monopolist can do better: by increasing cost/decreasing
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Unformatted text preview: quantity on x 2 the monopolist reduces profits from Type 2, but increases profits from Type 1 x 1 x 2 x 2 x 2 x 2 x p D 1 x p D 2 MC So the marginal increase in profits is - . x 1 x 2 x 2 x 2 x 2 x p D 1 x p D 2 MC By how much do we decrease x 2 to maximize profits? Until gain in profit=loss in profit. x 1 x 2 x 2 x 2 *[ x 2 * Oligopoly April 7 Econ 100A Prof. Reynolds Find firm 1s best response function when market demand is x=10-2p and marginal cost is constant $2 A. x 1 = (6-x 2 )/2 B. x 1 = 3 B. x 1 = (10-x 2 )/2 D. x 1 = (6-x 2 )/3 C. Something else How would we determine monopoly output & profit? What quantities will firm 1 & firm 2 produce? A. Firm 1: Firm 2: B. Firm 1: Firm 2: C. Firm 1: Firm 2: D. Firm 1: Firm 2: E. None of the Above Are firm 1 & 2s combined profits larger than a monopolists profits? A. Yes B. No C. Cant Tell...
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This note was uploaded on 09/11/2011 for the course ECON 100A taught by Professor Woroch during the Spring '08 term at University of California, Berkeley.

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Clicker questions April 5 _ 7 with illustrations - quantity...

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